If you thought the economy couldn't get worse under Joe Biden, wait 'til you get a load of what Kamala Harris has in store for it.

According to The Hill:

Vice President Harris on Friday will outline a series of economic policy proposals as part of her presidential campaign, including a call for a federal ban on corporate price-gouging.

Harris will deliver remarks in North Carolina, a battleground state in November, where her campaign said she will focus on plans to lower the cost of groceries. The vice president will say that soaring meat prices in particular have contributed to a spike in grocery bills, and she will call out corporate consolidation in the market.

Those meat hike price rises, like everything else, including the price of oil, are the direct result of government overspending and money-printing that have brought us inflation. Harris proposes to control these prices, as if any business raising prices is "greedy," cracking down on what the Bolsheviks used to call "hoarders and wreckers."

But inflation and the interest rate hikes used to control it, hit every aspect of the economy, not just groceries, from rents to housing stock, to medical care, to credit card rates, to consumer goods. And they are all the function of too much money chasing too few goods, which is why prices go up.

On everything, everywhere. Inflation, as Milton Friedman has stated, is always and everywhere a monetary phenomenon.

You get rid of inflation the way President Javier Milei of Argentina did, by stopping the government spending.

But Kamala Harris is unlikely to know where Argentina is, let alone learn from its experiences, both good and bad, and the rest of her economic plan is to spend trillions more on child care.

Eat your heart out, Evita, Kamala is getting out the government credit card, and stealing the jewels off the necks of the theatre-goers.

Her basic idea, though, is lifted straight out of the book of Lenin.

Kamala Harris has proposed a sweeping price controls, supposedly to cut inflation at the grocery stores. The inflation wracking the rest of the economy, from housing prices, to medical care, to credit card interest rates, would not be addressed, just groceries would, but who's to say she won't solve those problems the same way?

It will work about as well as it worked in the Soviet Union, Cuba, and Venezuela. Like shortages? Like long lines? Like bread lines where the bread runs out? Like ration cards? This is the way you get those shortages.

The 20th century is replete with instances of price controls creating shortages.

According to Capitalism magazine, in a 2023 piece:

The most infamous example of universal price controls – which Professor [Paul] Krugman endorses – is the Soviet Union. Under communism, the government controls all means of production, so a communist government faces the burden of deciding every single price in the economy. In its attempt to perform this impossible task, the Soviet Union at one time employed 30,000 price setters and economic planners at Gosplan, its central economic bureaucracy charged with managing its economy and carrying out successive Five Year Plans. Unsurprisingly, it was a disaster, resulting at its worst in mass starvation (a result documented in every communist society) and, at best, widespread poverty and a complete inability to make technological advances on its own, without importing or stealing them from the West. Ultimately, the Soviet economy could not be planned, and it finally collapsed in 1991.

A 2012 university paper by a student, Steven M. Efremov, summarizes what happened in the Soviet Union awfully well:

The results show that inflation was a factor in both the rise and the fall of the Soviet Union. Russia‟s first hyperinflation (1917-1923) nearly destroyed the economy, and the Bolsheviks were forced to stabilize prices. The Soviet system of price controls prevented inflation, but it also created persistent shortages of food and consumer goods. Mikhail Gorbachev tried to alleviate these problems, but his efforts resulted instead in Russia‟s second hyperinflation (1992-1993).

They tried the same thing over and over again until it finally knocked them out of power.

But that didn't necessarily have to happen, there also is Cuba's dictatorship, which isn't going anywhere soon, owing to its emigration spigot to the states. It solves its inflation problems the exact same way, and this was last month:

HAVANA, July 1 (Reuters) - Cuba`s government said late on Sunday it would double down on price controls and continue to fight tax evasion in an increasingly desperate bid to tamp down on a ballooning fiscal deficit and spiraling inflation that have devastated its economy.

The measures will bring the 2024 budget and goals in line with what the government refers to as a "war-time economy," according to a state-run media summary of a meeting of the Council of Ministers, the country`s top executive body.

It's not the first time it's done it.

Actually, it's done it over and over and over and over again, which is why a visitor to Cuba that I know reported meeting a girl who eats a piece of ice for lunch each day to stave off hunger.

Venezuela, under dictator Hugo Chavez, followed the same Cuban model, and lemming-like, went off the same cliff.

According to ANH Academy:

Following Hugo Chávez’s presidential election in 1998, his socialist government relied on revenues from oil production to alleviate poverty and guarantee food security. Price control policies imposed in 2003 fixed prices on all staple foods and effectively banned imports for private distributors of these foods. Imported goods were sold at state-subsidized food markets, called “mercales,” to improve financial and physical access to food. In 2008, oil revenues accounted for 93% of Venezuela’s exports (Benzaquen, 2017). Despite decreases in food production due to increased prices for inputs like biofuels, fixing prices meant that the Venezuela could afford greater amounts of imports at elevated crisis prices, which effectively mitigated the effects on the Venezuelan population.

However, the government overspent during periods of oil price surges, leaving the country with little savings and in default once oil revenues crashed. Venezuelan President Nicolás Maduro, who succeeded former President Chávez in 2013,  significantly decreased the importation of goods in an attempt to curtail the mounting debt (Figure 1). Despite earlier successes, the country now faced extreme food scarcity.

Expropriation of Land
As the government successfully imported most consumer goods (Benzaquen, 2017), Maduro’s policies that intended to promote domestic production created unintended consequences for Venezuela’s producers and consumers. The Land Act, implemented in 2001, transferred ownership of land from large, private landholders to poor Venezuelans and compensated the previous owners (Forero, 2009). Government officials intended for the redistribution of land to improve agricultural production at minimal cost, thus improving domestic control over Venezuela’s food supply However, not all farmers had the necessary capital and training to successfully manage their new farms. Farmers were further hindered by price controls which stunted profits. Worse still, farmers faced violent crime, theft, and extortion as people resorted to crime to support their livelihoods (Zuñiga & Miroff, 2017).

I saw those expropriated farms with my own eyes on a trip to Yaracuy and Cojedes states in Venezuela in late 2005 and they were hovels, wretched barefoot people clamoring under trees from the heat amid burned-out houses of legitimate farmer owners and entire fields going to weeds and trash. The farms that hadn't yet been expropriated resembled those excellent farming operations seen in the Midwest. The expropriated and redistributed farms resembled disaster zones. But the good farms feared what was coming, and eventually did come as the expropriators took their property and redistributed it, too.

The other thing I saw was a full page ad in El Universal from a major brewery called Polar, begging Chávez not to institute price controls, or the company would go under. Price controls are hell on factory production, which is what we see over and over again in Russia, Cuba, Venezuela and the rest. Want zero factories? Want dysfunctional factories producing only left shoes? This is how you get those kinds of factories.

The Hoover Institution's David R. Henderson puts paid to the idea that price controls ever work as expected:

The main problem with price controls is that they prevent prices from rising when demand increases or supply falls. If the government doesn’t allow prices to rise in such circumstances, we get shortages and line-ups. That’s what happened in the gasoline market with Nixon’s price controls. It’s true that price controls will reduce the measure of inflation, but they actually hide inflation. Inflation is, after all, an increase in the cost of living. Most of us would rather buy steak at $10 a pound from the butcher who has steak than go to the butcher who doesn’t have steak but is charging $8 a pound. That $8 a pound does not signify a lower cost of living if we can’t get the steak.

One of President Biden’s most outrageous proposals is for nationwide rent controls. It would be nice to see Krugman or Blanchard, or ideally both, lay out something they must know, namely that rent controls cause housing shortages and discourage new building. Rent controls also increase racial discrimination by landlords. The reason is that because the rent controls cause shortages, landlords who face a queue of qualified applicants can exercise their “taste” for discrimination without giving up any rental income. One danger of Krugman’s dalliance with price controls is that it can lay the groundwork, whatever his intent, for destructive measures like rent controls.

Chile fooled around with price controls in the 1960s, got its signature shortages of socialism as a result, and by the early 1970s, ended up with a real dictator, the Marxist Salvador Allende, whose price controls were writ large in the full Cuban model with Castro himself coming into the country to give orders. By then, there was nothing left of the Chilean economy and only the actions of Chile's legislators and courts brought about the advent of Gen. Augusto Pinochet in 1973 commanding him to restore order and set up a military government. Pinochet, a career military man, knew absolutely nothing about economics, but did demand economic results, which is why he brought in the free market mostly Milton Friedman-trained economists known as the "Chicago Boys." They got rid of price controls and the special interests lobbying for them, and turned Chile in a very short period of time into a first-world country. Chilean economist Jose Piñera, who instituted the private savings plan known as "the Chilean Model" is the most prominent and has quite a tale to tell about special interests in his excellent (yet tragically hard to find) memoir, and many free-marketers contributed to this success story across the Chilean economy. This memoir, by former Chilean finance minister Hernán Buchi, translated into English, which focuses much about getting rid of price controls, is also particularly good.

Argentina messed around with it, too -- and ended up with hyperinflation along with its signature shortages of socialism, as it refused to halt government spending, yet tried to mask its resulting inflation with price controls. It capped prices yet kept printing money which is what Harris is proposing here, and got economic meltdowns.

According to the International Monetary Fund:

This period of relatively low inflation came to an end in 1971, however, as relaxed wage policies were combined with expansionary monetary and fiscal programs. In an attempt to slow inflation, several types of direct price controls were instituted toward the end of the year and, in particular, firms were not allowed to pass on increased wage costs to their output prices. These controls were unsuccessful, however, in slowing inflation, and in the following year the rate almost doubled. The government that came to power in 1973 brought with it the so-called Social Contract, one of the main goals of which was to increase the real wage level; and in June 1973, prices for a large number of consumer goods were lowered by 7 to 20 per cent, while wages were raised by approximately 20 per cent. As a result, business and agricultural profits were squeezed; black markets developed; and, by April 1974, sufficient pressure had been created to force the government to relax its price controls. Since, at the same time, wages were allowed to rise, an inflationary spiral began, weakening the government’s fiscal position and aggravating the price distortions, especially for public-sector tariffs, that were already in evidence. The government attempted to halt wage increases, but its efforts collapsed under union pressure, and inflation sharply accelerated. By the end of 1975, the country’s foreign reserves had sharply declined, and the problem of repayment of foreign debt had reached a critical point. In March 1976, the new government removed all price controls, leading to an initial burst of inflation that was largely a result of official prices reaching what had previously been black market levels. The rate of inflation sharply decelerated thereafter, and prices, which had risen by 175 per cent during the first half of the year, rose by only 63 per cent during the second half.

Three days ago, Newsweek reported that libertarian free market President Javier Milei ended price controls, known as rent controls, on housing.

Here's what happened:

Argentina's recent repeal of rent control by libertarian President Javier Milei has led to a surge in housing supply, with the freedom to negotiate contracts, previously restricted, directly causing a drop in rental prices.

Milei, a self-described "anarcho-capitalist" known for his free-market approach, repealed the 2020 Rental Law, enacted by former leftist President Alberto Fernández, which had imposed restrictions on landlords and led to a significant decline in rental availability.

The dynamic is so simple, predictable and certain: Price controls lead to shortages. Price controls with unlimited government spending leads to hyperinflation and shortages. The effect is bad enough to bring down entire governments.

And now Kamala Harris, daughter of a professor of Marxist economics at Stanford, is proposing that same failed idea for America and giggling her way through the Instagram and TikTok crowds to get the votes for it.

If we don't stop this, we will go right off those same falls and into the same socialist abyss.

Yet unlike some of these places cited, we will have the benefit of history -- that socialism fails every time you try it, and price controls are precisely why it fails so badly. It happens every time. Want shortages? This is how you get shortages. Kamala will bring those shortages and another bottom will fall out of the economy, another one that we naïvely thought could never happen. But it will happen, because there is no escaping the laws of economics.

Image: Picryl // public domain